Fines Aren’t Enough for Fair Markets: Minouche Shafik

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Top Headlines

Fines Aren’t Enough for Fair Markets: Minouche Shafik – Wall Street Journal (subscription)
High-profile enforcement actions have resulted in very significant penalties for firms across a wide range of markets, amounting to more than $150 billion since 2009. These fines demonstrate that conduct that undermines the integrity of financial markets won’t be tolerated by regulators, and have no doubt had a deterrent effect. Fines have also focused the attention of corporate boards and shareholders on the seriousness of conduct issues within their firms. But fines alone aren’t enough.

UBS Chief: Lessons Learned, But You Can’t Foolproof the System – Wall Street Journal (subscription)
Sergio Ermotti, chief executive of UBS, which has paid billions of dollars for rate rigging scandals, said Thursday his bank had “learned [the lesson] and we are fixing it,” but cautioned against penalising senior executive for failures with people lower down in the organisation.

Monetary Divergence Drives FX ETF Growth – Euromoney
After years of modest growth, currency hedged exchange-traded funds (ETFs) are capitalising on the travails of the euro and yen.

UBS Gave Out ‘Instruction Manual on Fixing Libor,’ Hayes Said – Bloomberg
Thomas Hayes, a former trader on trial over charges he manipulated benchmark rates, told prosecutors in 2013 that UBS Group distributed “an instruction manual on fixing Libor” to suit their trading positions.

Experts Defend FEMR’s Treatment of Controversial Issues – Profit & Loss (free story)
Speakers on Profit & Loss’ webinar “The Legacy of FEMR: Where Do We Go From Here?” defended the Fair and Effective Markets Review’s treatment of controversial issues such as last look, internalisation and time stamps.

 

Regulatory News

SEC Backs UK Rules on Banker Accountability – Financial Times (subscription)
One of the most powerful US regulators has endorsed UK rules that will hold senior managers of financial firms to account for failures on their watch — signalling that similar measures may be considered across the Atlantic.

IMF’s Vinals Says Central Banks May Have to be “Market Makers” – Reuters
Central banks may need to become “market makers of last resort” if there is not enough liquidity during volatile sell-offs, a senior International Monetary Fund official said on Thursday.

FX Fines Boost UK Public Finances in May – Market Watch
The British government borrowed less in May compared with the same month last year, official statistics showed Friday, as receipts were boosted by a fine imposed on Barclays Bank for failing to control its traders from rigging foreign exchange markets.

 

Company News

JP Morgan Pulls Ahead in FICC Tussle – Wall Street Journal (subscription)
A much improved first quarter for fixed income, currencies and commodities units within the largest investment banks has resulted in JP Morgan pulling ahead of its rivals at the top of the global FICC league table, according to new research.

DTCC Kicks off Global Data Harmonisation Plans with Derivatives – Banking Technology
US post-trade utility the DTCC has issued a series of recommendations on global data harmonisation, beginning with credit derivatives, as part of a grand push to harmonise 30 data fields across global trade repository providers and create a global data dictionary.

FastMatch Updates Last Look Procedure – FX Week (subscription)
Trading platform FastMatch is the latest foreign exchange venue to tweak its rules on last look liquidity, only weeks after three of its rivals announced similar changes. In a note to clients from chief executive Dmitri Galinov, FastMatch clarified the two types of liquidity received by clients on the platform – order driven and quote driven (last look).

CME-LCH Basis to Persist, Say Dealers – Risk Magazine (subscription)
Attempts by CME Group to lure interdealer swap traders away from its main rival are not likely to succeed, according to trading and clearing sources at four banks, although early evidence suggests a suite of measures announced by the US exchange group last month may be having some impact. If CME fails in its bid, the outcome is likely to be a persistent price difference for trades.

 

Market Savvy  

Greece Update: Q&A (part 1)
Deutsche Bank
Developments in Greece have been rapid over the last 24 hours. Yesterday’s Eurogroup meeting concluded in deadlock. EU President Tusk has announced an emergency EU leaders’ summit for 6pm London time on Monday to discuss Greece. In this first part of a Greece Q&A, we address some of the most relevant issues.

Norway Cuts Rates to Record Low, Flags More Cuts
Financial Times (subscription)
Norway has stuck to the expected plan and cut its benchmark interest rate to a record low, sending the currency dropping. “Developments in the Norwegian economy have been slightly weaker than expected and the economic outlook has deteriorated somewhat,” said Governor Øystein Olsen.

USD Stands its Ground
Saxo Bank
The most compelling development since yesterday is the lack of follow-through in USD selling after what was clearly a more dovish than expected FOMC meeting – could it be that the USD makes a stand here?

 

Press Releases

Coinsetter and Shift Forex Release Bitbroker, Bitcoin Liquidity for FX Industry
Coinsetter, the global bitcoin exchange based in New York City, and Shift Forex, a leading foreign exchange consulting firm, today announced the launch of Bitbroker, a new bitcoin liquidity and market data service for foreign exchange brokers.

 

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